NZ dollar gains after weaker US economic reports damp demand for greenback
By Tina Morrison
June 26 (BusinessDesk) - The New Zealand dollar advanced after US economic reports raised concerns about the strength of the world's largest economy, damping demand for the greenback.
The kiwi rose to 87.28 US cents at 8am in Wellington, from 86.78 cents at 5pm yesterday. The trade-weighted index touched a high of 81.26 overnight, close to the record 81.29 reached earlier this month, and was recently at 81.19 from 80.80 yesterday.
The US dollar index, which measures the greenback against a basket of currencies, touched a five-week low overnight after a report showed the US economy shrank at a 2.9 percent annual rate in the first quarter, instead of the 1 percent pace reported last month, the largest revision since the series began in 1976. Economists had expected a decline of about 1.8 percent. Meanwhile, a separate report showed orders for long-lasting US manufactured goods unexpectedly declined 1 percent last month, the first drop in three months.
"The US dollar weakened across the board due to weaker GDP data," ANZ Bank New Zealand strategist Carrick Lucas and senior foreign exchange strategist Sam Tuck said in a note. "Uncertainty in the US will keep NZD/USD stronger for longer."
The kiwi will probably trade between 86.80 US cents and 87.60 cents today, ANZ said.
Stronger US GDP in the second quarter may largely offset the first quarter declines, ANZ said.
Tonight, traders will be eyeing an inflation report in the US which is closely watched by the Federal Reserve. The core PCE deflator is expected to rise to a 1.6 percent annual pace in May, from a previous pace of 1.4 percent.
In New Zealand today, the Reserve Bank publishes details of mortgage lending for high debt borrowers at 3pm.
The New Zealand dollar advanced to 92.88 Australian cents from 92.68 cents yesterday, gained to 64.06 euro cents from 63.76 cents, rose to 51.42 British pence from 51.12 pence and jumped to 88.93 yen from 88.42 yen.